Punitive damages are a typical concept of common law countries and they are used especially in the United Kingdom4 (Cappelletti, 2015) (except 2 See Judgment of the European Court of Justice, Joined Cases C-295/04 a C-298/04,
Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA e altri, EU:C:2006:461; Judgment of the European Court of Justice, Case C-46/93 e C-48/93, Brasserie du Pêcheur SA v. Bundesrepublik Deutschland e The Queen v Secretary of State for Transport, ex parte: Factortame Ltd e altri, EU:C:1996:79; Judgement of the European Court of Justice, case C-367/15, Stowarzyszenie Oławska Telewizja Kablowa, EU:C:2017:36, para 27.
3 Although Article 3, paragraph 3 excludes punitive, multiple and other types of damages,
due to space constraints, this chapter will only focus on punitive damages.
4 The first judgement that recognized punitive damages was issued in England in 1763
(Huckle v. Money, [1763] 2 Wils. 205, 95 Eng. Rep. 768 (K.B.)). Later, the concept of punitive damages was transplanted to the United States. In the field of competition law, the first ruling whereby the UK Competition Appeal Tribunal (CAT) awarded punitive damages to the victim of an abuse of a dominant position was issued on 5 July 2012 (case 2 Travel Group Plc v. Cardiff City Transport Services Limited).
for Scotland5 (Fulton, 2017)), in the Republic of Ireland,6 in Cyprus, in the United States, and in Canada (Gotanda, 2003; Bau 2014; Schirripa, 2017). They consist of the award to the victim of a sum of money in addition to what is strictly necessary to compensate the harm suffered.7
Under British law, punitive damages contribute, together with compensatory damages, to the achievement of specific objectives, such as punishing the tortfeasor for his behaviour and dissuading market players from engaging in socially harmful behaviours. Moreover, they reward the injured party for enforcing his rights and grant him a further sum of money beyond what is needed to compensate the harm suffered, when the latter appears inadequate8 (Schirripa, 2017, Croff, 1981, p. 600 et seq.).
Similarly, in the United States, in the event of non-contractual liability9 (Spoto, 2008, p. 351), courts may impose punitive or exemplary damages in addition to compensatory damages, if the infringer has acted with malice or gross negligence (Cappelletti, 2015, p. 807; Galanter and Luban, 1993, p. 1393, 1397–99). The compensatory function, typical of the remedy for tort law, is therefore accompanied by a punitive and deterrent purpose, which is typical of a penal sanction. Moreover, exemplary damages – according to some of the American legal scholars (Galanter and Luban, 1993, p. 1393, 1397–99; 5 Scotland has a different legal system guaranteed by the Acts of Union of 1707. This
regulation does not provide for punitive damages. See Scottish Law Commission, Report on Damages for Wrongful Death, September 2008: ‘Awards of damages are compensatory in nature, not punitive: the aim is to put the victim – or his family – in the position in which he would have been had he not been injured, so far as money can achieve this’.
6 See The Irish law reform Commission (1998). Consultation paper on aggravated, exemplary
and restitutionary damages, p. 59-78, retrieved from: http://www.lawreform.ie/_fileupload/ consultation%20papers/cpAggravatedDamages.htm. See also Competition Act 2002, Section 14 (5)(b).
7 For alternative definitions of ‘punitive damages’, see http://www.businessdictionary.com/
definition/punitive-damages.html (they are ‘a Court awarded sum that is considerably or greatly higher than the measurable value of the injury. Punitive damages are meant not to compensate the aggrieved party but to punish the offending party for its reckless or unconscionable actions or conduct.’); http://www.dictionary.com/browse/punitive-damages (they are ‘damages awarded to a plaintiff in excess of compensatory damages in order to punish the defendant for a reckless or wilful act.’).
8 In fact, the author emphasizes that no problem arises when the English courts find
themselves having to recognize an American conviction decision that was issued following a judgment in which the injured person acted in a personal capacity, while recognition is excluded when the victim acted as a private public prosecutor (for example, in the antitrust field).
9 Punitive damages should be recognized only when the reprehensible act committed by the
tortfeasor integrates a hypothesis regulated by the law of tort and should not be recognized in the case of breach of contract; however, this principle has undergone many derogations over time.
Cappelletti, 2015, p. 807) – have also become a tool of public regulation for the prevention of harmful conduct, since a private citizen who has been the victim of, for example, an antitrust violation, can take the position of Private Attorney General and bring his punitive claim against socially unwanted conducts (Rabkin, 1998, p. 196; R.C. Meurkens, 2014, p. 27 et seq. e 189 et seq.; Schirripa, 2017; Iannuccelli, 2015, p. 226).
In the field of US competition law, in particular, there is a special form of compensation with over-compensatory, deterrent and punitive purposes10 known as ‘treble damages’.11 It consists of a sum of money equal to three times the amount of the harm suffered that the judge automatically awards to the injured party. This instrument was introduced to encourage private plaintiffs to enforce antitrust laws12 (Cavanagh, 2005, p. 150 et seq. e 169 and et seq.), but it also has the effects of punishing the infringer and discouraging others from engaging in anti-competitive conducts13 (Baer, 2014; Wils, 2009, p. 17 et seq.).
In other European countries14 (Koziol, 2008, p. 750; Rouhette, 2008, p. 322 et seq.), punitive damages have been, at least initially, regarded by courts as incompatible with national rules on torts and civil liability (Schirripa, 2017; L. Meurkens, 2014, p. 10 et seq.; Saravalle, 1993, p. 875; Borgia, 2008, p. 851 et seq.). In these countries, in fact, damages have an exclusively compensatory function and they seek to indemnify the injured person for the harm suffered through the material restoration of the status quo ante or the payment of an amount of money. The principle on which the damages are based is that of the restitutio in integrum, which consists of re-establishing the same situation 10 There is discussion among legal scholars on the relationship between punitive damages
and treble damages. For some of them, they are placed in a genus ad speciem relationship, for others, they exclude each others. On this point, see American Bar Association, Antitrust Section (1998). Punitive Damages and Business Torts, p. 18; William Mitchell Law review (1986). The Antitrust Treble Damages Remedy. William Mitchell Law Review, volume 9, issue 2, Article 9, p. 13. Retrieved from: https://open.mitchellhamline.edu/cgi/viewcontent.cgi?referer=https:// www.google.com/&httpsredir=1&article=2632&context=wmlr (20.06.2018). It has been stated in the case-law that the application of treble damages excludes that of punitive damages: see the judgement of the US District Court for the Southern District of New York, Hansen Packing Co. v. Armour & Co., 16 F. Supp. 784, 788, S.D.N.Y., 30 July 1936.
11 Clayton Act, 15 U.S.C.A., paragraph 12 et seq., 1982.
12 William Mitchell Law review (1986). The Antitrust Treble Damages Remedy. Supra. 13 See the judgement of the Supreme Court of the United States Mitsubishi Motors Corp.
v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 635 (1985), in which it is stated that treble damages create ‘a crucial deterrent to potential violators’. See also Directorate for financial and enterprise affairs competition committee (2015). Relationship between public and private antitrust enforcement, p. 2, retrieved from: https://www.ftc.gov/system/files/attachments/ us-submissions-oecd-other-international-competition-fora/publicprivate_united_states.pdf.
in which the injured party would have been found if a violation had not been committed. Therefore, in a system of this kind, punitive damages are inconceivable because they pursue a different objective, namely deterrence.
In some of these countries, however, there has recently been an attitude of greater openness by national courts, at least with regard to the recognition of foreign rulings that impose punitive damages awards (Zarra, 2016, p. 968; Quarta, 2016, p. 1159B; Lopez De Gonzalo, 2017, p. 714).
In Italy, for example, the Court of Cassation originally took the view that the idea of punishment and sanction was alien to the system of civil liability and claimed that its only function was the restoration of the injured party’s property sphere15. However, in 2015, the Court of Cassation stated that the sanctioning function of damages is compatible with the general principles of the Italian legal order. In doing so, the Court took into consideration the legislative reforms that have gradually attributed to the compensation system a sanctioning connotation16 (Lopez de Gonzalo, 2017, p. 436), alongside the (however preponderant) compensatory-reparatory one. Also the Italian Constitutional Court ruled that civil liability may have both a retributive and compensatory function.17 However, the definitive turnaround of Italian jurisprudence took place in 2017, when the Court of Cassation ruled that the concept of punitive damages is not ontologically incompatible with the Italian legal system, provided that the foreign punitive damages award is based on a sufficiently precise provision and complies with the legality and proportionality principles18 (Zarra, 2017, p. 722; Lopez De Gonzalo, 2017, p. 714).
Also the French legal system has become gradually less hostile to punitive damages. Indeed, the French Supreme Court overruled a decision of a lower court, which had ruled that punitive damages are incompatible with French public policy. The French Supreme Court ruled that the principles underlying an award of punitive damages are not in themselves contrary to public policy, but that incompatibility may result from the awarded sum of 15 Judgement of the Italian Court of Cassation civ., Sez. III, 19 January 2007, n. 1183;
Judgement of the Italian Court of Cassation civ., Sez. I, 8 February 2012, n. 1781.
16 In this sense, the following have been reputed to indicate the will of the legislator to
overcome the traditional reluctance to grant a lato sensu (in a broad sense) punitive character to the compensation: Article 124, paragraph 2 and 131, paragraph 2, of the Legislative Decree n. 30/2005 (which, in the field of patent and trademark, have replaced Articles 86 R.d. 1939/1927 and 66 R.d. 929/1942); Article 140, paragraph 7 of the Legislative Decree n. 206/2005 (on consumer protection); Article 709-ter, n. 1), n. 2) and n. 4), c.p.c. (in the field of non-fulfilment of child custody obligations) and many others.
17 Decision of the Constitutional Court, 11 November 2011, n. 303; decision of the
Constitutional Court, June 23, 2016, n. 152.
18 Judgment of the Italian Court of Cassation, United Sections Chambers n. 16601 of 5 July
money, if it is disproportionate in relation with the injury suffered and the breach of contractual obligations. Thus, foreign punitive damages awards can in principle be recognised in France unless they are disproportionate to the harm sustained.19
The enforcement of punitive damages has also been allowed in a Spanish ruling where the Supreme Court stated that Spanish law does not provide for a strict separation between the civil and the criminal compensation systems: punitive damages, therefore, can be used to make up for the inadequacies of criminal law.20
As far as the European Courts are concerned, their positions are divergent: the European Court of Human Rights has consistently rejected, even in cases of serious violations of fundamental rights guaranteed by the ECHR, applicants’ requests aimed at obtaining, in addition to material and morals damages, the award of punitive damages.21 The Court of Justice of the European Union, on the other hand, established that reparation of harm as a result of breaches of EU law must be commensurate with the harm suffered, but it also stated that national courts may award specific damages, such as exemplary damages, pursuant to claims or actions based on European law, if such damages may be awarded pursuant to similar claims or actions based on domestic law.22
With particular regard to competition law, the Court of Justice first confirmed in the Courage judgement the compatibility with EU law of the prohibition of unjust enrichment, which seemed to exclude the possibility for national courts to impose punitive damages.23 By contrast, in the subsequent Manfredi24 judgment, the Court established the possibility for national courts to increase
19 Judgment of the French Court of Cassation, First Civil Chamber, n. 1090 of 1 December
2010.
20 Judgment of the Spanish Supreme Court, Miller Import Corp. v. Alabastres Alfredo, S.L., of
13 November 2001 (Exequátur No. 2039/1999). However, for some commentators the judgment should be interpreted narrowly and as limited to the specific facts of the case. Cf. J. De Bruyne, De Potter de Ten Broeck and Van Hiel, 2015, p. 218–221.
21 Judgment of the ECtHR, Akdivar v Turkey, 1 April 1998, n. 21893/93; Judgment of the
ECtHR, Selcuk and Asker v Turkey, 24 April 1998, n. 30451/96; Judgment of the ECtHR, Cable and others v United Kingdom, 18 February 1999, n. 24436/94; Judgment of the ECtHR, Gaygusuz v Austria, September 16th 1996, n. 17371/90.
22 Judgment of the European Court of Justice, Case C-46/93 e C-48/93, Brasserie du Pêcheur
SA v. Bundesrepublik Deutschland e The Queen v Secretary of State for Transport, ex parte: Factortame Ltd e altri, EU:C:1996:79, para 90.
23 Judgment of the European Court of Justice, Case C-453/99, Courage Ltd v Bernard Crehan
e Bernard Crehan v Courage Ltd e altri, EU:C:2001:465, para 30: ‘Community law does not prevent national courts from taking steps to ensure that the protection of the rights guaranteed by Community law does not entail the unjust enrichment of those who enjoy them’.
24 Judgment of the European Court of Justice, Joined Cases C-295/04 a C-298/04, Vincenzo
damages for deterrent purposes, that is, in the absence of a connection with the amount of harm actually suffered by the victim. To this end, in the absence of EU rules governing that field, it is for the domestic legal system of each Member State to set out the criteria for determining the extent of the damages for harm resulting from an antitrust violation, provided that the principles of equivalence and effectiveness are observed.25 Therefore, according to the European Court of Justice, ‘it must be possible to award particular damages, such as exemplary or punitive damages, pursuant to actions founded on the Community competition rules, if such damages may be awarded pursuant to similar actions founded on domestic law’.26